Market regulator Sebi on Friday fined Reliance Industries (RIL) Rs 13 crore for alleged non-disclosure ofdiluted earnings per share (EPS) for six quarters, saying this information would have a significant impact on the stock price. Of the total penalty, Rs 12 crore was for violation of Securities Contracts (Regulation) Act and the balance Rs 1 crore for violation of listing agreement. This is one of the highest penalties imposed by Sebi for non-disclosure of a key earnings parameter.
The case dates back to 2007-08 when RIL issued 12 crore warrants to the company's promoters, which was later converted into an equivalent number of equity shares. Sebi alleged that the issuance of convertible warrants led to dilution of the pre-issue paid-up equity share capital of RIL, but the company failed to disclose such dilution of earnings for six consecutive quarters.
On its part, RIL said that it was not an issue of non-disclosure since the basic EPS and diluted EPS were the same, and since basic EPS was already disclosed every quarter, there was no question of non-disclosure. "The issue relates to the method of calculation of diluted EPS under the Accounting Standards. It can be observed from the results published by the company of all the quarters in question that both basic and diluted EPS have been disclosed," an RIL statement said.
The case dates back to 2007-08 when RIL issued 12 crore warrants to the company's promoters, which was later converted into an equivalent number of equity shares. Sebi alleged that the issuance of convertible warrants led to dilution of the pre-issue paid-up equity share capital of RIL, but the company failed to disclose such dilution of earnings for six consecutive quarters.
On its part, RIL said that it was not an issue of non-disclosure since the basic EPS and diluted EPS were the same, and since basic EPS was already disclosed every quarter, there was no question of non-disclosure. "The issue relates to the method of calculation of diluted EPS under the Accounting Standards. It can be observed from the results published by the company of all the quarters in question that both basic and diluted EPS have been disclosed," an RIL statement said.
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